1099's and Estimated Tax Payments

Published on: 16:49PM Jan 15, 2020

Just a reminder that Form 1099s need to be prepared and mailed by January 31.  These forms are required if payments exceeding a cumulative total of $600 for the calendar year 2019 are made to any unincorporated service businesses.

It does not matter if the payment was made via check, cash, credit cards, bitcoin, paypal, etc.  As long as the cumulative totals exceeds these amounts you are required to issue Form 1099s if you are a business.

If you have a rental that you want to classify as a business to take advantage of the Section 199A 20% deduction, the IRS requires you to issue Form 1099s.  If you do not issue Form 1099s, the IRS may send a notice saying you do not qualify for the 199A deduction and the penalty for not filing the form can easily exceed $500 or more for each one not filed.

Also, today is the due date for farmers to make their estimated tax payments.  We have discussed why this may be better than filing and paying your tax by March 1 in previous posts.

Instead of sending in a check to the IRS to make this payment, another option is to use EFTPS which is the electronic payment system for the federal government.  This allows you to schedule your individual estimated tax payments in advance and not have to write a check or pay postage. 

There is no charge for this service.  You likely already use EFTPS for your business, but many do not know they can use it for their own personal use.  This the method I use to make my estimated tax payments (unlike farmers I have to pay four times a year).